Over time my friend/client/co-blogger Gregg Smith and I have talked at length about the burden that regulation has on people freely engaging in business activities with voluntary participants. Over the weekend we had the chance to have a short, but I think substantive, discussion about what might be done to make it possible at the margin so people could start and grow small businesses by reducing the regulatory costs and barriers to entry that make it difficult or impossible for individuals to enter or expand in markets that are dominated by established and larger players.
Gregg and I are convinced that, at the State level, the Montana Administrative Procedures Act is an abrogation of duty by the legislature as well a problem that is largely unknown to the public. While an effort to overturn that on constitutional grounds may at this point in time be seen as Quixotic, that should not discourage our efforts to look for additional ways to yank regulation back by the scruff of its neck for the benefit of citizens at the lower end of the economic spectrum. On the larger efforts we are glad, for now, to let the rich fight their own battles even if we are in agreement.
For example, the state of Montana requires that individuals who wish to be licensed in cosmetology must complete 2000 thousand hours of training at a licensed beauty school prior to being granted a license to practice. The cost of such training runs in excess of $13,000 and a year of one’s life forgoing any significant income. We question the validity of this rule. Several states require much less training – in many cases less than half the hours to get a restricted license to simply cut hair – and therefor enable their citizens to enter the market at substantially lower costs whereby providing significant increased opportunity. Although we have not begun an investigation into this rule, a cursory reaction is that it protects practitioners by artificially reducing competition. Additionally, it protects beauty schools by creating an artificial demand for a curriculum that looks potentially superfluous. We wonder what pressure, if any, was applied by whom to create what we think is an artificial barrier to entry. Regardless if this rule was caused by political favoritism or simply an overstatement of the public interest by rule makers, it needs to be reviewed to see if the public interest would be better served by a reduced barrier to entry.
There are many areas that we think may be affected by either legislators’ misunderstanding or rent seeking. Over the next weeks and months we will develop tools to review regulations on the books, determine who those regulations benefit, and what is the public interest of more or less restriction. We will ask if regulations exist out of a legitimate public interest or if they are caused by the influence of rent-seeking “city fathers” to restrict competition. We will ask if the regulatory process that exists is in place to protect the public interest or to make life easier for the regulators. And, to the extent possible, we will attempt to model the costs and benefits of regulations with an eye on providing opportunities to those who wish to compete with limited means in the face of larger entrenched and monied interests.
We are hoping that we can get significant participation from the professional community and the public at large in identifying areas of improvement to reduce the regulatory burden at the local, county and state level. We hope that we can gain enough involvement to have a significant impact on state legislators so we can begin to address the larger problem of the Montana Administrative Procedures Act. But regardless of our “long-game” goals, we are convinced that we can make a difference at the city and county levels to free people who choose to risk their time and money and enter the arena of competition on a fairer, more level playing field that now favors entrenched businesses.
We’re not yet sure what direction we’ll take or what resources and technology we will need. But we know that we can use the help of lawyers to review existing code, stories from individuals about regulatory difficulties, database programmers, researchers, accountants and economists to complete the skill set to make this a durable effort. Of course, anyone with a computer who wants to help will have an opportunity to do so. I have included a page at the top of the site where you can contact us to help in the project. For now we simply ask you to contact us by email but we promise you that we soon will have automated mailing lists to organize our efforts.
In the mean time, we have sketched out a preliminary mission statement that we think appeals to people on both the left and right of the political spectrum. But as always, we value your input.
Mission and background:
As the amount of local, county and state regulation increases, the ability of Montana citizens to exercise their rights under Montana’s Constitution Article II “of pursuing life’s basic necessities” has become increasingly difficult. While we understand the state’s interest in protecting the public through regulation, we also understand that the regulatory corpus becomes outdated, ineffective, and presents barriers to entry for people working in their own interest and it needs continual review for rationality, cost effectiveness and process efficiency in order to provide for the economically disadvantaged to rightfully earn a living in the economic pursuit of their choosing.
We are convinced that the regulatory burden falls disproportionately hard on individuals who hope to create and trade products and services who are in the initial start-up or early expansion phase of small business enterprises and that certain regulations are in place either from a poor understanding of the risks posed to the public or by regulatory capture of special interest who, under the banner of public interest, gain by limiting the entry of new competition and market participants. Additionally, over time the bureaucratic processes of regulation become equally prohibitive for new and growing market entrants and increases in perpetuity for the convenience of the regulators at the expense of the regulated.
Thus, the goal of The Montana Regulation Project (The Project) is to reduce the regulatory barriers to entry for first stage growth and other small enterprises to the greatest extent possible without damaging the public interest.
Areas of Review:
As time and resources permit, a review of all regulations for both policy and process at every level of government at the State level and below is desired. Areas of particular concern are occupational licensing, health codes, building codes, zoning ordinances, access to public property, general licensing and fees. Although the goal is likely impracticable, such a broad objective is required in order to allow whatever resources The Project can muster to be directed to areas that are deemed to have the highest benefit without the confines of otherwise arbitrary restrictions.